Contract learning in the aftermath of exchange disruptions : an empirical study of renewing interfirm relationships

Abstract

Drawing from the contract learning literature and studies on managing exchange disruptions, this study examines how contracts can be adjusted ex post an exchange disruption to renew interfirm relationships. A multiple-informant survey approach is adopted in this study. Two types of senior managers in 272 manufacturing firms in China (a total of 544 senior managers) are interviewed regarding the resolution process and outcome of exchange disruptions. We find that ex ante contract detail fosters ex post contract adjustments, and contract adjustment has an inverted-U-shaped relationship with relationship continuity in the aftermath of exchange disruptions. Furthermore, the findings show that the relationship between contract adjustment and relationship continuity is moderated by the interdependence structure (buyer dependence advantage and joint dependence) of an interfirm relationship.